Should Public Health Care Replace Employer-Sponsored Insurance?
Two experts debate the issue.
The current system is an albatross around the neck of American businesses.
Employer-based health insurance in the U.S. is the result of a quirk of history. During World War II, U.S. companies competed for a limited pool of workers. Fearing crippling wage inflation, the federal government imposed a wage freeze. To recruit workers, companies began offering health insurance as a benefit, which the government then made tax-exempt. Now, employer-provided health insurance covers 152 million Americans.
But the system creates a terrible burden for businesses and working families. An expansion of the government’s Medicare program would eliminate that burden and result in better care for millions of Americans.
In contrast to the U.S., many European governments chose to provide a broad range of government-sponsored health care to their citizens. Over time, we’ve seen the results of the two approaches.
Every modern industrialized society in the world other than the U.S. has achieved universal coverage at a lower cost. In the U.S., more than 27 million people are uninsured and 60 million are underinsured, and those numbers have been rising in recent years. Studies also show that Americans pay more per capita than comparable countries for health care.
It costs an average of nearly $20,000 a year to provide insurance for one U.S. worker’s family. The price of health insurance has gone up 55 percent in the past 10 years, and that’s not the whole story. The cost of co-pays, deductibles and other out-of-pocket expenses have also increased.
My company, MCS Industries Inc., a picture frame manufacturer, spends more than $2.5 million a year to insure 165 employees in the U.S. The company’s cost for health care has risen dramatically over the years and currently is equal to 22 percent of payroll. And that’s not including the cost of time spent by employees researching plans or by HR staff administering benefits.
These costs force businesses to make hard decisions. How can we invest more in wages or new jobs when we’re spending so much on health care benefits? How can we move into new markets or product lines? How can we keep prices competitive with producers in countries where businesses don’t carry this burden?
To control costs, many business owners switch health plans frequently or pass more costs on to their employees with high-deductible plans. That's one reason employee deductibles have gone up 212 percent over the past decade, completely wiping out any wage increases.
Medicare, on the other hand, operates without extensive sales and marketing expenses and has been extremely efficient in controlling overhead costs.
An expansion of Medicare to cover all Americans could be paid for through a payroll tax of 9.5 percent, along with modest dividend and capital gains tax increases, according to an analysis of the House Medicare for All Act (H.R. 1384) by the Hopbrook Institute, a progressive think tank.
The expanded program would provide comprehensive care, and it would eliminate all deductibles, co-pays and out-of-pocket expenses. It would save trillions of dollars over the next decade on our national health care bill and finally result in universal health care for all Americans. And it would end the health insurance albatross around the neck of U.S. businesses.
Richard Master is the CEO of MCS Industries in Easton, Pa., and chairman of the nonprofit advocacy group Business for Medicare for All.
Employer-sponsored insurance provides convenience and support.
With the presidential primaries looming, we’re hearing more about health care initiatives designed to control costs and improve patient care, including proposals to expand Medicare. As an HR practitioner with more than 35 years of experience in benefits design, I often wonder if there’s an easier way to administer health insurance in the U.S. But Medicare-for-all is not the answer to the country’s health care challenges.
From HMOs to PPOs to high-deductible insurance, the U.S. has long been the land of employer-sponsored plans. Given the wide variety of plan designs, and differences in the ways states regulate insurance, will the U.S. ever be able to unite behind a single public plan? I don’t think so. Something so complicated would take years (or even decades) to debate, let alone implement.
But it would be a mistake to trade away the many advantages that come with employer-sponsored plans.
For businesses, these plans provide flexibility to tailor coverage and benefits to a particular employee population and its needs—a hallmark of the U.S. health care model. To make sound choices about benefits that resonate with their distinct employee groups, employers receive information from insurance carriers about plan utilization. Moving to a one-size-fits-all public plan would remove the creativity and flexibility that businesses and workers rely on under the U.S. model.
For job candidates and current employees alike, health benefits and salary rank as the most important pieces of an employer’s total rewards package. Employees generally like their employer-sponsored health insurance plans because they’re less expensive than those that workers could get on the open market. (When given the opportunity to participate in employer-sponsored health insurance, more than 80 percent of employees typically enroll.)
Employer-sponsored health plans provide workers with access to more physicians, hospital services and durable medical equipment than Medicare does. A reduction in these benefits or an increase in costs would create financial stress for many.
Employer plans also create a “one-stop shop” for workers. Premiums are conveniently paid through automatic paycheck deductions. And human resources departments and benefits specialists stand ready to provide direction and answer questions.
Part of my concern about a government-sponsored Medicare-for-all-type of plan stems from watching my parents navigate Medicare in their retirement years. The system can be complex and frustrating.
I’ve seen my parents and other retirees add supplemental Medi-gap insurance to their Medicare plan to cover things like crutches and walkers—benefits they were accustomed to receiving in their employer-sponsored plans prior to retirement. And frequently, as people age and require more medical services, they need to add a pharmacy plan or increase coverage in Medicare Part D, the optional Medicare prescription drug benefit.
The Medicare system can also be a bureaucratic puzzle, where care is granted for some and denied for others. Appeals can be costly and potentially detrimental to one’s health. Ultimately, all of this will reduce access to health care and could discourage Americans from seeking medical attention until the situation is dire. And I can only imagine the new taxes we would have to pay to expand Medicare. I prefer to stay the course with employer-sponsored plans.
Brenda Rushforth, SHRM-SCP, is chief human resources officer at Pomona College in Claremont, Calif., a member of the SHRM Advocacy Team and Chair of Legislative Affairs for Professionals in Human Resources Association (PIHRA), SHRM's largest affiliate chapter.
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